A digest of events, trends, issues, ideas and journalism from and about rural America, by the Institute for Rural Journalism and Community Issues, based at the University of Kentucky.
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Friday, April 01, 2016

USDA reports not much help for already struggling grain prices; corn acreages projected to soar

The Grain Stocks and Prospective Plantings reports released Thursday by the U.S. Department of Agriculture's National Agricultural Statistics Service offered little help for struggling farmers, Spencer Chase reports for Agri-Pulse. Don Roose, of U.S. Commodities, "categorized the reports as negative, primarily due to the increase in corn acres." He told Chase, "From here forward, to get anything positive going, particularly on corn, you're going to have to have weather issues.”

The Prospective Plantings report states that corn acreage is projected at 93.6 million acres, a 6 percent increase from last year and the third highest planted acreage since 1944. Soybean is estimated at 82.2 million acres, down less than 1 percent from last year; wheat is estimated at 49.6 million acres, down 9 percent from last year; and cotton is 9.56 million acres, an increase of 11 percent from last year.

The Grain Stocks report states that corn stocks on all positions, as of March 1, totaled 7.81 billion bushels, up 1 percent from last year. Soybeans stored in all positions totaled 1.53 billion bushels, up 15 percent from last year; all wheat stored in all positions was 1.37 billion bushels, up 20 percent from last year; and durum wheat stocks totaled 41.5 billion bushels, up 10 percent from last year.

"Within 30 minutes of the reports releases, the corn market had suffered double-digit losses, mainly on the potential for increased acres, Roose said," Chase writes. "Despite the jump in stocks, very little movement was observed in the corn or wheat markets because the increases were largely in line with analyst projections. Since prices are low across the board, Roose said current language in farm programs could be driving producer decisions to plant more corn." Roose told Chase, “I think the producer looked at the insurance rates on corn and soybeans and looked at the profitability and thought . . . that gave us the best chance in a negative year to come up with at least a better chance of profit probability."

Roose said that "while growing more and more corn could, in turn, continue to lower prices and hurt the farm bill programs that are based on 5-year Olympic averages," Chase writes. Roose, who said the producer's hand is somewhat forced, told Chase, "Insurance is coming down, the coverage is coming down, but what do you do? It's mainly a reflection of the market conditions that are driving everything.” (Read more)

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